Little is known about how the adoption and diffusion of medical innovation is related to and influenced by market characteristics such as competition. The particular complications involved in investigating these relationships in the health care sector may explain the dearth of research. We examine diagnostic angiography, percutaneous coronary interventions (PCI), and coronary artery bypass grafting (CABG), three invasive cardiac services. We document the relationship between the adoption by hospitals of these three invasive cardiac services and the characteristics of hospitals, their markets, and the interactions among them, from 1996–2014. The results show that the probability of hospitals adopting a new cardiac service depends on competition in two distinct ways: 1) hospitals are substantially more likely to adopt an invasive cardiac service if competitor hospitals also adopt new services; 2) hospitals are less likely to adopt a new service if a larger fraction of the nearby population already has geographic access to the service at a nearby hospital. The first effect is stronger, leading to the net effect of hospitals duplicating access rather than expanding access to care. In addition, for-profit hospitals are considerably more likely to adopt these cardiac services than either nonprofit or government-owned hospitals. Nonprofit hospitals in high for-profit markets are also more likely to adopt them relative to other nonprofits. These results suggest that factors other than medical need, such as a medical arms race, partially explain technological adoption.

We examine the role of self-employment in retirement transitions using a panel of administrative tax data. We find that the hazard of self-employment increases at popular retirement ages associated with Social Security eligibility, particularly for those with greater retirement wealth. Late-career transitions to self-employment are associated with a larger drop in income than similar mid-career transitions. Data from the Health and Retirement Study suggest that hours worked also fall upon switching to self-employment. These results suggest that self-employment at older ages may serve as a "bridge job," allowing workers to gradually reduce hours and earnings along the pathway to retirement.

Retail clinics are an innovation that has the potential to improve competition in health care markets. We use the universe of emergency room (ER) visits in New Jersey from 2006–14 to examine the impact of retail clinics on ER usage. We find significant effects of retail clinics on ER visits for both minor and preventable conditions; Residents residing close to an open clinic are 4.1–12.3 percent less likely to use an ER for these conditions. Our estimates suggest annual cost savings from reduced ER usage of over $70 million if retail clinics were made readily available across New Jersey.

The Affordable Care Act (ACA) includes several provisions designed to expand insurance coverage that also alter the tie between employment and health insurance. In this paper, we exploit variation across geographic areas in the potential impact of the ACA to estimate its effect on health insurance coverage and labor market outcomes in the first two years after the implementation of its main features. Our measures of potential ACA impact come from pre-existing population shares of uninsured individuals within income groups that were targeted by Medicaid expansions and federal subsidies for private health insurance, interacted with each state's Medicaid expansion status. Our findings indicate that the majority of the increase in health insurance coverage since 2013 is due to the ACA and that areas in which the potential Medicaid and exchange enrollments were higher saw substantially larger increases in coverage. While labor market outcomes in the aggregate were not significantly affected, our results indicate that labor force participation reductions in areas with higher potential exchange enrollment were offset by increases in labor force participation in areas with higher potential Medicaid enrollment.

w23622Is It Who You Are or Where You Live? Residential Segregation and Racial Gaps in Childhood Asthma
Diane Alexander, Janet Currie

Higher asthma rates are one of the more obvious ways that health inequalities between African American and other children are manifested beginning in early childhood. In 2010, black asthma rates were double non-black rates. Some but not all of this difference can be explained by factors such as a higher incidence of low birth weight (LBW) among blacks; however, even conditional on LBW, blacks have a higher incidence of asthma than others. Using a unique data set based on the health records of all children born in New Jersey between 2006 and 2010, we show that when we split the data by whether or not children live in a "black" zip code, this racial difference in the incidence of asthma among LBW children entirely disappears. All LBW children in these zip codes, regardless of race, have a higher incidence of asthma. Our results point to the importance of residential segregation and neighborhoods in explaining persistent racial health disparities.

w23645Addressing the Opioid Epidemic: Is There a Role for Physician Education?
Molly Schnell, Janet Currie

Using data on all opioid prescriptions written by physicians from 2006 to 2014, we uncover a striking relationship between opioid prescribing and medical school rank. Even within the same specialty and county of practice, physicians who completed their initial training at top medical schools write significantly fewer opioid prescriptions annually than physicians from lower ranked schools. Additional evidence suggests that some of this gradient represents a causal effect of education rather than patient selection across physicians or physician selection across medical schools. Altering physician education may therefore be a useful policy tool in fighting the current epidemic.

We analyze older individuals' debt and financial vulnerability using data from the Health and Retirement Study (HRS) and the National Financial Capability Study (NFCS). Specifically, in the HRS we examine three different cohorts (individuals age 56–61) in 1992, 2004, and 2010 to evaluate cross-cohort changes in debt over time. We also use two waves of the NFCS (2012 and 2015) to gain additional insights into debt management and older individuals’ capacity to shield themselves against shocks. We show that recent cohorts have taken on more debt and face more financial insecurity, mostly due to having purchased more expensive homes with smaller down payments.

While research shows that there are large gains in lifetime wealth from delaying claiming Social Security, most people claim at or before full retirement age. We fielded an original, nationally representative survey to gain insight into people's rationales for their Social Security claiming decisions, their satisfaction with their past claiming decisions, and how they financed any gap between retirement and claiming. Common rationales for claiming Social Security before full retirement age include stopping work, liquidity, poor health, and concerns about future benefit cuts due to policy changes. Claiming upon stopping work and claiming at full retirement age appear to be viewed as social norms. But while Social Security claiming is strongly associated with stopping work, the roughly quarter of the sample who have a gap of two or more years between retirement and claiming used employer-sponsored pensions and other saving to finance the delay. Individuals who claimed at full retirement age are more satisfied with their claiming decisions than individuals who claimed early or delayed. There is little evidence that claiming decisions and rationales for claiming are correlated with financial literacy or knowledge of Social Security rules.

This paper examines the link between legislative politics, hospital behavior, and health care spending. When trying to pass sweeping legislation, congressional leaders can attract votes by adding targeted provisions that steer money toward the districts of reluctant legislators. This targeted spending provides tangible local benefits that legislators can highlight when fundraising or running for reelection. We study a provision — Section 508 — that was added to the 2003 Medicare Modernization Act (MMA). Section 508 created a pathway for hospitals to apply to get their Medicare payment rates increased. We find that hospitals represented by members of the House of Representatives who voted 'Yea' on the MMA were significantly more likely to receive a 508 waiver than hospitals represented by members who voted 'Nay.' Following the payment increase generated by the 508 program, recipient hospitals treated more patients, increased payroll, hired nurses, added new technology, raised CEO pay, and ultimately increased their spending by over $100 million annually. Section 508 recipient hospitals formed the Section 508 Hospital Coalition, which spent millions of dollars lobbying Congress to extend the program. After the vote on the MMA and before the vote to reauthorize the 508 program, members of Congress with a 508 hospital in their district received a 22% increase in total campaign contributions and a 65% increase in contributions from individuals working in the health care industry in the members' home states. Our work demonstrates a pathway through which the link between politics and Medicare policy can dramatically affect U.S. health spending.

Mental illnesses are prevalent in the United States and globally, and cost is a critical barrier to treatment receipt for many afflicted individuals. Affordable insurance coverage can permit access to effective healthcare services and treatment of mental illnesses. We study the effects of recent and major eligibility expansions within Medicaid, a pubic insurance system in the U.S. that finances healthcare services for the poor, on psychotropic medications prescribed in outpatient settings. To this end, we estimate differences-in-differences models using administrative data on medications prescribed in outpatient settings for which Medicaid was a third-party payer between 2011 and 2016. Our findings suggest that these expansions increased psychotropic prescriptions by 22% with substantial heterogeneity across psychotropic class and state characteristics that proxy for patient need, expansion scope, and system capacity. We provide further evidence that Medicaid, and not patients, primarily financed these prescriptions. These findings suggest that public insurance expansions have the potential to improve access to evidence-based treatments among low-income populations suffering from mental illnesses.

Home equity is the primary self-funding mechanism for long term services and supports (LTSS). Using data from the relevant waves of the Health and Retirement Study (1996–2010), we exploit the exogenous variation in the form of wealth shocks resulting from the value of housing assets, to examine the effect of wealth on use of home health, unpaid help, and nursing home care by older adults. We find a significant increase in the use of paid home health care and unpaid informal care but no effect on nursing home care access. We conduct a placebo test on individuals who do not own property; their use of LTSS was not affected by the housing wealth changes. The findings suggest that a wealth shock exerts a positive and significant effect on the uptake of home health and some effect on unpaid care but no significant effect on nursing home care.